NEW YORK – Stocks are plunging after Congress’ latest bid to resolve the federal budget gridlock appeared to fail.

The Dow Jones industrial average is down 312 points, or 2.7 percent, at 1,484 at 11 a.m. Eastern time. The Standard & Poor’s 500 index is down 31, or 2.5 percent, at 1,185. The Nasdaq composite index is down 68, or 2.7 percent, at 2,504.

A 12-member bipartisan panel was assigned to cut $1.2 trillion from the federal deficit by Wednesday. The panel appeared ready to admit failure on Monday. That could lead to broad, automatic cuts from military and social spending.

Uncertainty about government spending drags on the economy because the private sector is growing so slowly. Traders also fear that Europe’s debt crisis might spill over, disrupting the fragile U.S. recovery.

Join the Conversation

We invite you to use our commenting platform to engage in insightful conversations about issues in our community. Although we do not pre-screen comments, we reserve the right at all times to remove any information or materials that are unlawful, threatening, abusive, libelous, defamatory, obscene, vulgar, pornographic, profane, indecent or otherwise objectionable to us, and to disclose any information necessary to satisfy the law, regulation, or government request. We might permanently block any user who abuses these conditions.

If you see comments that you find offensive, please use the “Flag as Inappropriate” feature by hovering over the right side of the post, and pulling down on the arrow that appears. Or, contact our editors by emailing moderator@scng.com.